2 Franz Properties To Be Auctioned

NEWPORT NEWS — The four-story Commerce Bank building and neighboring Commerce Plaza Shopping Center were once two of the most visible symbols of Erwin Franz's mushrooming real estate empire.

Wednesday, the two Oyster Point buildings will be on the auction block because a New Jersey-based life insurance company is foreclosing on a $5.10 million construction loan.

The buildings, at 603-629 Pilot House Drive, are owned by Franz-Winkler Properties II, a partnership established by Franz, a West German investor who came to the Peninsula in 1984, and Georg C. Winkler, a Swiss investor.

The partnership was created to own and operate the office building and shopping center. On May 5, it filed for protection from creditors under Chapter 11 of the Federal Bankruptcy Act.

The Commerce Bank building has few tenants; the second and third floors are both vacant, said Walter Apelt, executive director of the Oyster Point Development Corp. OPDC has its offices on the first floor of the Commerce Bank building.

"I am surprised that a building of this quality and this choice location has two floors vacant," Apelt said.

"With a little more effort and a little less notoriety, they should be leased easily," he said.

According to bankruptcy court documents, Franz estimated the value of the buildings at $8 million. Apelt said several prospective buyers have been looking at the land in the past few weeks.

Franz-Winkler II owes about $5.42 million to Mutual Benefit Life Insurance Co. of Newark, N.J., according to the bankruptcy file. The court on Aug. 9 gave the insurance company permission to sell the property at a trustee's sale.

The sale is scheduled for 11 a.m. Wednesday at Newport News Circuit Court.

The Commerce Bank buildings are among the last of the Franz's real estate holdings - a tiny empire that grew to more than 170 acres in less than four years, but then collapsed in 1988. Also among the former Franz holdings:

* Franz Windows International, a window factory in Oyster Point that at its peak employed 60 people, was sold to a West German investment corporation in March 1988, and it closed soon afterwards.